France’s richest man, Bernard Arnault, is shifting his fortune to Belgium. Gérard Depardieu, the country’s greatest actor (figuratively and literally)is moving to Russia. And, if rumours are to be believed, Nicolas Sarkozy is planning a new career in London. That’s the problem with very high taxes – they don’t redistribute wealth; they redistribute people. …the rich don’t sit around waiting to be taxed. …many financiers can open their businesses abroad simply by opening their laptops. The result of a hike in tax rates is thus often a fall in tax revenue – which means, of course, that the rest of us end up paying more to cover the share of the departed plutocrats.

The complexity of a tax system is every bit as damaging to competitiveness as the overall tax rate. The more convoluted the tax code becomes, the more time we have to take off work to comply with it.Tolley’s Tax Handbook is now 11,500 pages long, twice what it was when Gordon Brown became chancellor, and the number of tax lawyers has increased commensurately. …The very wealthy, who can afford ingenious tax advisers and high upfront fees, turn this complexity to their advantage, sheltering their assets in various pockets unintentionally created by government schemes. Again, the rest of us then have to pay more to make up their portion.

Since we have 72,000 pages of complexity and corruption in our tax code, I can’t help but comment that the Brits are lucky that they “only” have 11,500 pages (assuming, of course, that the methodology in both page counts is similar).

In both cases, though, Hannan is right in stating that complexity benefits those who can hire lots of tax lawyers, financial planners, accountants, and other tax advisers.

The answer, of course, is a flat tax. Hannan doesn’t explicitly embrace that option, but he does write about the benefits of lower rates and fewer distortions.

There is one other point he makes that is worth noting. He cites a former Labour Party politician who explicitly was willing to have less prosperity if it meant more equality.

You might, of course, agree with Roy Hattersley, who once said that he’d rather have 5% more equality than 10% more prosperity. That is a respectable position, but at least be honest about it. Wealth taxes create more equal, but poorer societies.

Margaret Thatcher eviscerated that destructive mentality many years ago in this famous speech, but this is an area where proponents of limited government need to do more work.

Tax reform would be great! Throw in some modest spending cuts (real cuts, not fake cuts) and spending restraint.

It’s also worth noting about Chili, that they have reformed their SS program into private accounts. What I find interesting about private SS reform is the positive influence it would have on the economy with so many people investing in the private sector, not the government!!! I know that’s where I’d rather have my money…

Reblogged this on Public Secrets and commented:
Rather than come up with sensible tax policy, the progressive politician’s answer to people relocating to more tax-friendly climates is likely to be something desperate and clutching — such as an “exit tax.” You laugh, but some activists in California have already tried.